Employment

Launch of the 2017 Employment Outlook

Remarks by Angel Gurría

OECD Secretary-General

Berlin, Germany, 13 June 2017

(As prepared for delivery)

Dear Minister Nahles, Ladies and Gentlemen:

It is my pleasure to launch the OECD’s 2017 Employment Outlook, our flagship report on key labour market developments and prospects in OECD member countries. I’d like to thank Minister Nahles and Germany’s Federal Ministry of Employment and Social Affairs for hosting this event. Today’s launch is very timely given our High-Level Policy Forum on the new OECD Jobs Strategy here in Berlin, which has brought together many Ministers, experts and social partners. It also builds on discussions at last week’s OECD 2017 Ministerial Council Meeting in Paris, Making Globalisation Work: Better Lives for All.

This year’s edition ─ the 35th in our annual series ─ covers a lot of ground. It provides a cross-country comparison of labour market performance in terms of the quantity and quality of jobs and inclusiveness, looks at the policy determinants of labour market resilience following the 2008 economic crisis, assesses how technology and globalisation are transforming the labour market, and offers a rich description of collective bargaining in OECD countries.

OECD employment is returning to pre-crisis levels

Let’s start with some good news. Labour market conditions are continuing to improve in OECD countries! In 2016, the employment rate finally returned to pre-crisis levels. The employed share of the population aged 15 to 74 years rose for the third consecutive year, reaching 60.8% in the fourth quarter, and is expected to reach 61.5% by end 2018, above its peak in the fourth quarter of 2007 when it stood at 60.9%. Moreover, the OECD’s projections suggest further improvements until at least the end of 2018. This pick up in employment is consistent with the mild strengthening of the economic recovery reported in our Global Economic Outlook last week.

Unemployment in the OECD area has fallen by 12 million people since peaking in the first quarter of 2010, and youth unemployment is down by 3.8 million. The OECD average unemployment rate is projected to inch further downwards from 6.1% at the end of the first quarter of 2017 (38 million unemployed) to around 5.7% by the end of 2018 (36 million unemployed).

But significant labour market challenges persist

Despite this positive news however, a number of important challenges persist. The labour market recovery remains highly uneven. For example, while we project that Germany’s employment rate will be 9 percentage points above its pre-crisis level by end 2018, the OECD average will only be 1 percentage point above. Large jobs deficits will persist in some countries, including Greece, Spain, Ireland and Italy.

And the ongoing backlash against globalisation offers a vivid reminder that getting back to pre crisis employment levels is simply not enough. Even in countries where employment has recovered, wage growth remains subdued and the occupational structure of labour markets is changing significantly, making it difficult for some workers to find rewarding employment opportunities. Between 1995 and 2015, the middle-skill share of employment fell by 9.5 percentage points in the OECD area, while the shares of high- and low-skill occupations rose by 7.6 percentage points and 1.9 percentage points, respectively. Even though certain jobs have been displaced by imports, the 2017 Employment Outlook shows that new technologies, such as those associated with the new production revolution and digitalisation, play an even bigger role in the disruption of labour markets.

Increasing opportunities, upskilling and enabling people

But this doesn’t mean that we should put the brakes on globalisation or on technological progress ─ both of which are powerful engines for the global economy and contribute to greater overall wellbeing. Neither should we worry about technology-related mass unemployment either: as some jobs are automated, new ones are created and others become more efficient and safe.

Rather, our 2017 Employment Outlook shows that governments should focus upon enabling people to thrive in a rapidly changing labour market. And policies must be able to anticipate changes, not simply respond to them. In this context, while it is more important than ever to build the right skills for those in education, it is also crucial to make sure all workers have opportunities to upskill and reskill themselves throughout their working lives. Countries should also better assess changing skills needs, adapt curricula and guide students and workers towards choices that give easier access to new job opportunities. And they must pay close attention to adult education and training given today’s highly dynamic labour market. In all OECD countries, high skilled workers have two to three times as many opportunities to participate in on-the-job training as their low-skilled counterparts!

The increasing need for lifelong learning is further challenged by growing atypical forms of employment ─ such as temporary, part-time, and platform economy employment ─ that generally offer less opportunities for training. Here we look with great interest at countries introducing individual training accounts, such as the French Compte personnel d’activité or the German Persönliche Erwerbstätigenkonto announced recently by Minister Nahles.

But developing the right skills is only half of the challenge. The other is improving skills use. Government initiatives to help employers adopt so-called “High-Performance Work Practices” ─ such as team work and incentive pay ─ can help make fuller use of workers’ skills.

Social protection and labour market policies must also adapt to more fluid forms of employment. Our 2017 Employment Outlook shows that more than one half of independent workers in Europe are not covered by unemployment benefits. Providing social protection for all is key. Countries should therefore take steps to ensure entitlements are portable from one job to the next, and make it easier to cumulate contributions from multiple jobs. We will advance these issues at the 2018 OECD Social Policy Ministerial Meeting in Canada.

Last but not least, the Outlook includes a new comparative scoreboard that helps countries identify priorities given their specific labour market context. The scoreboard shows that only a few OECD countries manage to do well in all three areas of labour market performance: quantity, quality and inclusiveness. Germany is one of these countries, but it has room for further progress in specific dimensions, such as closing gender pay gaps and reducing the share of working-age people with low incomes.

Ladies and Gentlemen:

Getting labour market policies right and providing workers with the opportunities and the skills for today’s and tomorrow’s jobs is undoubtedly one of the most important goals that we should aim for in our agendas.

Our 2017 Employment Outlook shows that we possess the tools we need to give people the opportunities to use their talents and be rewarded for their efforts. It is important to continue putting these tools to good use!